Correlation Between Hanesbrands and Bakrieland Development

Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Bakrieland Development at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hanesbrands and Bakrieland Development into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hanesbrands and Bakrieland Development Tbk, you can compare the effects of market volatilities on Hanesbrands and Bakrieland Development and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hanesbrands with a short position of Bakrieland Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Bakrieland Development.

Diversification Opportunities for Hanesbrands and Bakrieland Development

-0.29

Correlation Coefficient

Hanesbrands  Bakrieland Development

Very good diversification

The 3 months correlation between Hanesbrands and Bakrieland is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Bakrieland Development Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakrieland Development and Hanesbrands is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hanesbrands are associated (or correlated) with Bakrieland Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakrieland Development has no effect on the direction of Hanesbrands i.e., Hanesbrands and Bakrieland Development go up and down completely randomly.

Pair Corralation between Hanesbrands and Bakrieland Development

Considering the 90-day investment horizon Hanesbrands is expected to generate 0.64 times more return on investment than Bakrieland Development. However, Hanesbrands is 1.56 times less risky than Bakrieland Development. It trades about 0.17 of its potential returns per unit of risk. Bakrieland Development Tbk is currently generating about 0.02 per unit of risk. If you would invest  619.00  in Hanesbrands on September 11, 2024 and sell it today you would earn a total of  222.00  from holding Hanesbrands or generate 35.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Hanesbrands  vs.  Bakrieland Development Tbk

Hanesbrands

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hanesbrands are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental drivers, Hanesbrands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Bakrieland Development

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bakrieland Development Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bakrieland Development may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hanesbrands and Bakrieland Development

The main advantage of trading using opposite Hanesbrands and Bakrieland Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Bakrieland Development can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bakrieland Development will offset losses from the drop in Bakrieland Development's long position.

The idea behind Hanesbrands and Bakrieland Development Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.